Question

A corporation, ABC Corporation, is facing financial difficulties and its board of directors is considering entering into a risky investment venture. As a director of ABC Corporation, you are tasked with making a decision based on the business judgment rule. However, there are concerns raised by some shareholders regarding potential conflicts of interest involving the directors.

In this scenario, discuss the application of the 10. Business Judgment Rule 2 under the subject of Directors, Trustees, and Officers of Philippine corporate law. Specifically, analyze the following:

1. Outline the elements and requirements of the Business Judgment Rule 2.
2. Explain how the Business Judgment Rule 2 protects directors in making risky business decisions.
3. Discuss how conflicts of interest can affect the application of the Business Judgment Rule 2.
4. Provide recommendations on how directors can ensure compliance with the Business Judgment Rule 2 when faced with conflicts of interest.